Triple dip recession in austerity-plagued UK?

Following the report today on the UK service sector, economists are seeing only bad news with the shockingly poor numbers. If the pro-austerity crowd didn’t get it before, they may not get it now that austerity only causes more economic damage in a troubled economy.

Just as the services sector is important in the US, it’s a large chunk (75%) of the UK economy and it’s sinking, again. Imagine the damage that GOP austerity will cause in the US if the crazies in the House get their way.

It is possible, although not likely, that the report was a blip caused by the wet weather. This was, after all, the fourth fall in the survey in a row and – December 2010 apart – was the weakest since April 2009, when the world economy hit rock bottom after the collapse of Lehman Brothers the previous September.

CIPS/Markit say that the reason the services purchasing managers’ index dipped below the 50 level that separates expansion from contraction was an unwillingness of firms to invest at a time when their customers were not spending.

This is entirely consistent with the UK’s flat-lining performance over the last couple of years: businesses see no point in buying new plant and machinery until there are signs that consumers are willing to spend more. But household budgets are being stretched by the squeeze on wages and the rising costs of essentials such as food and fuel.

Chris in Paris
An American in Paris, France. BA in History & Political Science from Ohio State. Provided consulting services to US software startups, launching new business overseas that have both IPO’d and sold to well-known global software companies. Currently launching a new cloud-based startup. Full bio here.

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Whoever would have imagined that eliminating demand would hurt the economy?

Bub

I’m still predicting that as early as November, and as late as a year from June, the Tories will declare austerity a great success and by the way it’s time to invest in Britain’s infrastructure again.

This will be necessary for them to get re-elected. The next election must be held by late Spring 2015. It takes 18 months for policies to have an effect. Of course they might try to chance things on a six month spending spree, because that will permit 12 more months of torture to the underclasses, but they also need time for the voters to forget how much their cruel policies were counter productive – so I’m still saying sometime within the next year and a half they’ll implement expansionary policies in anticipation of the election of spring 2015.

Part of me hates to see this because it is hurting so many people, part of me is enjoying the fact that they are proving conservative policies to be flat out, uncontrovertably wrong. .

MyrddinWilt

Whether it is a single double or tripple dip only depends on what you count as an improvement.

And they are still joined at the hip to the Euro disaster zone. So even if they try a stimulus they may get knocked off course by another Euro meltdown.